Daily #2: How to get rich without getting lucky

Below are some words (copied from a twitter thread) from someone who appears to be wise and accomplished in business*. This writing seems to have resonated with a lot of people and I am going to use these words as a springboard to document my current thoughts on wealth and work.

Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.

I deeply believe this. Especially for relationships and knowledge. And I've experienced the benefits of actual compound interest from savings/investing. I am trying to figure out what this means for me in the context of entrepreneurial work.

I can imagine how this applies to content creators. If you publish a newsletter, a podcast, or blog posts consistently for a year, I imagine you get a return on that investment in some way. It may be in the form of making new friends, or even new customers and clients. I imagine this. I haven't experienced this directly. I haven't published anything consistently for that long (yet).

Code and media are permissionless leverage. They're the leverage behind the newly rich. You can create software and media that works for you while you sleep.

The permissionless part is so true with code. When I was working as an employee, I've always felt that more of my software developer teammates should realize this and feel empowered. No one can stop you from writing some code, you don't have to ask permission. If you think something can be improved, go ahead create a branch, make the code changes and share the diff to get thoughts from your colleagues. Within an existing business, I can see how code being a permissionless leverage can be true. But for building a brand new business, this can be tricky. If you want paying customers, you need to solve a frequent painful problem in a large enough market. You don't need to ask permission from your potential customers to start writing code per se, but we know "build it and they'll come" also doesn't work.

The quote above says "media" is also a permissionless leverage. Media I guess means writing, podcasts, videos and such. This feels true. You don't have to ask permission to create. And there will be some subset of people with whom your work will resonate, because, well, you are both human.  

Unless you have a paid newsletter, I don't see how you make money from media though. I guess there are sponsorships and advertisements. But those things feel indirect (and also not aligned with my style..hm). I guess the idea is you build an 'audience' and create an email list with the content over time and eventually create products/services that are paid.

This last point meshes well with the other point about doing work that compounds and "play long term games with long term people"

More to think through from this thread, especially about "specific knowledge". More on that tomorrow.

Naval@naval·May 31, 2018

Seek wealth, not money or status. Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth. Status is your place in the social hierarchy.

Understand that ethical wealth creation is possible. If you secretly despise wealth, it will elude you.

Ignore people playing status games. They gain status by attacking people playing wealth creation games.

You’re not going to get rich renting out your time. You must own equity - a piece of a business - to gain your financial freedom.

You will get rich by giving society what it wants but does not yet know how to get. At scale.

Pick an industry where you can play long term games with long term people.

The Internet has massively broadened the possible space of careers. Most people haven't figured this out yet.

Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.

Pick business partners with high intelligence, energy, and, above all, integrity.

Don't partner with cynics and pessimists. Their beliefs are self-fulfilling.

Learn to sell. Learn to build. If you can do both, you will be unstoppable.

Arm yourself with specific knowledge, accountability, and leverage.

Specific knowledge is knowledge that you cannot be trained for. If society can train you, it can train someone else, and replace you.

Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now.

Building specific knowledge will feel like play to you but will look like work to others.

When specific knowledge is taught, it’s through apprenticeships, not schools.

Specific knowledge is often highly technical or creative. It cannot be outsourced or automated.

Embrace accountability, and take business risks under your own name. Society will reward you with responsibility, equity, and leverage.

The most accountable people have singular, public, and risky brands: Oprah, Trump, Kanye, Elon.

“Give me a lever long enough, and a place to stand, and I will move the earth.” - Archimedes

Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media).

Capital means money. To raise money, apply your specific knowledge, with accountability, and show resulting good judgment.

Labor means people working for you. It's the oldest and most fought-over form of leverage. Labor leverage will impress your parents, but don’t waste your life chasing it.

Capital and labor are permissioned leverage. Everyone is chasing capital, but someone has to give it to you. Everyone is trying to lead, but someone has to follow you.

Code and media are permissionless leverage. They're the leverage behind the newly rich. You can create software and media that works for you while you sleep.

An army of robots is freely available - it's just packed in data centers for heat and space efficiency. Use it.

If you can't code, write books and blogs, record videos and podcasts.

Leverage is a force multiplier for your judgement.

Judgement requires experience, but can be built faster by learning foundational skills.

There is no skill called “business.” Avoid business magazines and business classes.

*I don't know anything about this person directly, except for what they have chosen to share as part of their Internet persona. I'm weary of putting someone on a pedestal, for I have no way to learn what kind of person they are in real life.